By Steve Rizer
In considering updates to its C-700 General Conditions standard contract document, the Engineers Joint Contract Documents Committee (EJCDC) spent “a lot of time” consulting with experts to determine what insurance provisions should be included, EJCDC Construction and Procurement Subcommittee Chairperson James Brown told professionals attending a webinar that WPL Publishing recently sponsored. The document’s provisions addressing insurance represent one of the four categories containing the “most significant” changes made to C-700, a document that he characterized as “the lynchpin” within the organization’s Construction Series of documents.
Under the revised C-700, insurance companies must, at a minimum, have an A.M. Best Co. financial strength rating of “A” and be classified in a financial size category (FSC) of VII. This new provision is “not the most stringent [one that could have been included], but we believe it’s something sufficient to ensure that you’re going to get a good insurance company," Brown said during the webinar, entitled “EJCDC 2013 New Construction Documents: An Overview.”
A.M. Best is a global credit-rating agency serving the insurance industry. The company assigns each rated (“A++” through “D”) insurance company an FSC. The FSC is based on adjusted policyholders’ surplus (PHS) and is designed to provide a convenient indicator of the size of a company in terms of its statutory surplus and related accounts. A class VII designation means that the insurance company has a PHS of at least $50 million.
In another C-700 insurance provision, “the owner and the contractor have to provide policies and endorsements upon the other’s request or even upon the request of an additional insured [party],” Brown reported. In addition, “we added the contractor’s pollution liability, which now covers contamination caused or worsened by the contractor. And we added provisions for professional liability insurance for any delegated design. We followed very closely what the engineer and owner agreement has to provide.”
C-700 represents “the real meat” of the Construction Series family of documents, Brown said. “It certainly is … the lynchpin of all the other documents and [is] actually the lynchpin of all the other families. Everything revolves around this. It’s really the main document that everything else was based on, and it’s clearly where we spent most of our time….” Other EJCDC families of documents include Engineering (Owner-Engineer, Master Agreement, Short Form, Engineer-Subconsultant, Teaming Agreement/Joint Venture, and others), Design-Build, Environmental Remediation, and Procurement (Buyer-Seller).
While there are hundreds of changes, he summarized the most significant changes to C-700 within the categories of “general reorganization,” “improvements to changes to the contract and claims,” “updated insurance provisions,” and “differing site conditions.”
“We did a general reorganization,” Brown explained. “As we looked at a lot of different paragraphs, we realized there were provisions really sprinkled throughout the document, and it really made sense to consolidate them. We made some very significant changes, and frankly what I consider the most significant change [was] to the process of what I like to call ‘just resolving simple arguments and disagreements.’ And as we discussed the nature of claims and how claims were going to be handled, we really understood that we had to make some changes to the differing-site-condition clauses.”
Brown, a vice president for Malcolm Pirnie, the water division of the global environmental engineering and consulting firm Arcadis-U.S. Inc., also discussed several other key EJCDC Construction Series documents, including those addressing advertisements for bids, qualifications statements, instructions to bidders, bid forms, supplementary conditions, and other areas.
To purchase a recording of the 90-minute webinar, visit http://constructionpronet.com/Products/1087.aspx.
